Policy Documents

Research & Commentary: Examining the Arkansas Medicaid Expansion Model

February 11, 2014

In several of the states that have chosen not to expand their Medicaid programs under the Patient Protection and Affordable Care Act (aka Obamacare), lawmakers are offering proposals to expand Medicaid under new schemes designed to improve the flawed program. The most popular of those is the Medicaid “premium assistance” first introduced in Arkansas. In this model, Medicaid funds are provided for those newly eligible for Medicaid to purchase private insurance through the federal insurance exchange.

Under the premium assistance model an estimated 250,000 new enrollees would be added to Arkansas Medicaid rolls and would purchase insurance from Arkansas’ Obamacare health insurance exchange, receiving a premium support payment to purchase the insurance. According to the Washington Post, projections by an actuary firm hired by Arkansas to review the plan found the premium support model would cost federal taxpayers $18.9 billion for the next ten years, while costing Arkansas $1.59 billion.

To continue the new program past the end of the fiscal year this summer, three-fourths of both houses of the legislature must approve the appropriation to accept the federal money that funds it. In response to concerns about the plan, many lawmakers are considering defunding it.

Arkansas’ model has several shortcomings. First, despite the private-market feel of the program, it is still an expansion of Medicaid, where multiple provisions of the insurance plan, such as cost-sharing, are dictated by the federal government, thus sacrificing the benefits of real free-market competition. Second, expansion will be extremely difficult to roll it back once it occurs.

Critics note there is no guarantee the federal government will allow the program to continue once it is up for renewal, and the feds could replace it with a system that is even less market-based. Medicaid is one of the fastest-growing liabilities in both state and federal budgets. State legislators thus should question whether the federal government will be able to live up to its promises and not shift the fiscal burden back on the state, further crowding out other important programs such as education and transportation.

Medicaid expansion is an expensive program that research shows fails to provide better or more affordable health care. Instead of expanding a flawed model that is very costly to taxpayers, delivers subpar health care, and shifts more power to the federal government, state lawmakers should instead consider reform options like those piloted in Florida, which reduce costs and offer better care to patients in the existing system.

The following articles examine Medicaid expansion and the Arkansas model from multiple perspectives.

Ten Principles of Health Care Policy
http://heartland.org/policy-documents/ten-principles-health-care-policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems. 

The Empty Promises of Arkansas’ Medicaid Private Option
http://heartland.org/policy-documents/empty-promises-arkansas-medicaid-private-option
The Foundation for Government Accountability examines the empty promises of Arkansas’ Medicaid Private Option—using supporters’ direct quotes from sources including media interviews, floor speeches, and social media posts—and rebuts them point by point. 

How Medicaid Expansion (and the “Private Option”) Will Lock its Clients into Poverty
http://heartland.org/policy-documents/how-medicaid-expansion-and-private-option-will-lock-its-clients-poverty
Dan Greenberg of the Advance Arkansas Institute argues legislators need to consider the potential economic problems from Medicaid expansion—slowing economic growth and trapping clients into low-wage jobs. 

Think Again: The Arkansas Plan for Medicaid Is Still a Bad Idea
http://blog.heritage.org/2013/05/16/think-again-the-arkansas-plan-for-medicaid-is-still-a-bad-idea/
In response to proponents’ attempts to keep the Obamacare Medicaid expansion alive by suggesting states pursue an “Arkansas model,” Nina Owcharenko of The Heritage Foundation provides several reasons the Arkansas model is still a bad idea. 

The Private Option: Medicaid Expansion by Another Name
http://heartland.org/policy-documents/private-option-medicaid-expansion-another-name
Americans for Prosperity’s state policy manager, Nicole Kaeding, breaks down what could be in store for Arkansas after the vote to expand Medicaid in the state. 

Why States Should Not Expand Medicaid
http://heartland.org/policy-documents/why-states-should-not-expand-medicaid
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington greater control over spending to better fit coverage expansion with their states’ needs, resources, and budgets. 

Wyoming Legislators: Please Reject Arkansas
http://www.wyomingpolicy.org/index.php/areas-of-research/health-care/136-wyoming-legislators-please-reject-arkansas
Christie Herrera, vice president of policy for the Foundation for Governmental Accountability, examines the Arkansas Medicaid expansion model and offers 10 reasons why Wyoming should reject it. 

Policy Tip Sheet: Medicaid Expansion
http://heartland.org/policy-documents/policy-tip-sheet-medicaid-expansion
Kendall Antekeier of The Heartland Institute explains why states should avoid Medicaid expansion and instead reform their fiscally unsustainable programs in ways that will offer better care at lower costs to taxpayers. 

Obama and the Medicaid Expansion: How Does Your State Fare?
http://blog.heritage.org/2013/03/05/obamacare-medicaid-expansion-state-by-state-charts/
The Heritage Foundation documents the future cost implications of Medicaid expansion on a state-by-state basis. 

Research & Commentary: States Should Avoid Medicaid Expansion
http://heartland.org/policy-documents/research-commentary-states-should-avoid-medicaid-expansion
Kendall Antekeier of The Heartland Institute explains the U.S. Supreme Court ruling on Medicaid expansion and outlines the fiscal consequences of expansion. “States should think twice about giving up more control of their Medicaid programs only to further expand a system that is already fiscally unstable,” she writes. 

Research & Commentary: The Medicaid “Cure”
https://heartland.org/policy-documents/research-commentary-medicaid-cure
The Heartland Institute’s Kendall Antekeier examines the Medicaid Cure, a pilot program established in five large Florida counties by Gov. Jeb Bush, a premium support model in which 290,000 Medicaid recipients are given a range of premiums and plans from which to choose. 

A Medicaid Cure: Florida’s Medicaid Reform Pilot
http://www.floridafga.org/2011/11/a-medicaid-cure-floridas-medicaid-reform-pilot/
The Foundation for Governmental Accountability gives insight into the Medicaid Cure’s success, stating, “When the patient is the priority, government and HMO bureaucrats are finally held accountable. Costs flatten and patient health and satisfaction improves.”

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at http://news.heartland.org/health, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database at www.policybot.org.

If you have any questions about this issue or the Heartland Institute Web site, contact Heartland Institute Government Relations Director John Nothdurft at jnothdurft@heartland.org or 312/377-4000.